UK economy shrinks by 0.1% in 2nd quarter

UK economy shrinks by 0.1% in 2nd quarter

The UK economy shrank by 0.6 per cent in June, pushing gross domestic product (GDP), the main measure of economic output, into a 0.1 per cent contraction in the second quarter. One key explanation is the extra jubilee bank holiday impacting the country's output while rising inflation eroded spending power. The ONS stated that consumption fell by 0.2% in the quarter, but there have been indications that the celebrations for the jubilee had little impact on the quarterly number with KPMG suggesting test and trace having a more significant effect on the decline of output in Q2. This is a temporary factor but this provides little respite moving forward with signs of weakness across the economy. Looking forward, the bank of England predicts the UK Economy will enter a recession heading into the last three months of this year and throughout 2023.